Merger deal would be worth £1.4 billion based on the current share price of both companies
Irn-Bru maker AG Barr has confirmed it is in talks with drinks giant Britvic on a possible £1.4 billion merger.
Cumbernauld-based Barr, a 178-year-old company which also makes Rubicon fruit juices and said its discussions are at an early stage with Essex-based Britvic.
Britvic, the maker of Tango, Robinsons squash, J20, and Fruit Shoot, collectively sells 1.9 billion litres of soft drinks a year across 50 countries globally and employs 3,500 people.
The tie-up, which would see Britvic shareholders own 63 per cent of any new company created post merger, would create one of Europe's largest soft drinks manufacturers.
Barr said in a statement today: "The Boards of Britvic and A.G. Barr note the recent press speculation and confirm that, following an approach by A.G. Barr to Britvic, they are in preliminary discussions which may or may not result in an all share merger of A.G. Barr and Britvic.
“A merger would create one of the leading soft drinks companies in Europe, with a strong portfolio of market leading brands. The combination would have compelling industrial logic and represents an opportunity for both companies to enhance their industry position, and achieve significant synergies and shareholder value.
“Discussions are at an early stage and, whilst there can be no certainty at this stage that such discussions will conclude successfully, agreement has been reached with respect to certain key aspects of the merger.
“It is agreed that Britvic shareholders would own 63 per cent and A.G. Barr shareholders 37 per cent of the enlarged group’s share capital."
The all-share deal proposal would be worth around £1.4 billion based on the current share prices of both companies, though Britvic is five times the size on Barr in revenue terms.
Britvic derives around 40 per cent of its annual sales from a tie-up with PepsiCo to sell its brands under licence.
Barr chief executive, Roger White, would lead the combined group, and Britvic's chief finance officer, John Gibney, would take up a similar role in the merged entity, and Britvic's chairman, Gerald Corbett, would become chairman of the combined group as well as taking up a role as deputy chairman of AG Barr.
A statement from Britvic today said although there was “no certainty” the merger discussions will conclude successfully, “agreement has been reached with respect to certain key aspects of the merger”.
In July, Barr, which employs around 1000 people across the UK, issued a first-half profit warning as a gloomy start to the summer and higher material costs hit margins.
Shares in AG Barr rose 6.8 per cent in early trading today, while shares in Britvic also rose 13.7 per cent.